Question
Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results: North South Sales
Care Inc., has two divisions that operate independently of one another. The financial data for the year 2015 reported the following results:
North South
Sales $6,000,000 $5,000,000
Operating income 1,900,000 1,800,000
Taxable income 1,500,000 800,000
Investment 14,000,000 11,000,000
The company's desired rate of return is 10%. Income is defined as operating income.
What are the respective residual incomes for the North and South Divisions?
| A. | $60,000 and $100,000 | |
| B. | $300,000 and $60,000 | |
| C. | $300,000 and $100,000 | |
| D. | $500,000 and $700,000 |
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
